Vladimir Putin signs the package of federal laws on the system of privileges in the Arctic
Russian Arctic becomes the country's and the world’s largest economic zone of almost 5 million square kilometers enjoying the unified privileges
On 13 July 2020, Russian President Vladimir Putin signed the package of federal laws on the system of privileges in the Arctic. The package of documents developed by the Ministry for the Development of the Russian Far East and Arctic includes the law on state support of entrepreneurial activity in the Russian Arctic and related amendments into Part 2 of the Tax Code and certain legislative acts of the Russian Federation, says the Ministry.
The package adopted by the State Duma of the Russian Federation on 7 July 2020 was approved by the Federation Council on July 8.
With the new package of laws, Russian Arctic becomes the country's and the world’s largest economic zone of almost 5 million square kilometers enjoying the unified privileges exceeding those of the European and Asian SEZs.
Potential resident of the Arctic Zone can apply from August 28 since the laws will enter into force 45 days after signing by the President and official publication. Commercial organizations or individual entrepreneurs with at least 1 million rubles of implemented and planned capital investments will be eligible to become Arctic residents. They should have no tax/duty debt exceeding 25% of the asset balance.
The law resets to zero the part of the corporate profit tax payable to the federal budget, provided that the region will reduce the rate of the profit tax payable to the regional budget. The measure will be applicable for ten years from the first receipt of profit on the activity in the Arctic zone under an investment agreement. To be eligible for the tax relief, companies must also keep separate records of the revenues and expenses generated by the activity in the Arctic and by any other operations elsewhere.
A rebate on severance tax is introduced for 2021-2032 with regard to the production of specific types of mineral resources (oil shale, peat, saleable ore, non-metal commodities, diamonds and other things) in the new subsurface site in the Arctic zone. Coal and hydrocarbon production will not be eligible for the rebate. New subsurface sites include those where the depletion of reserves will be equal to or below 0.001 as of January 2021, or the sites that are not recorded in the national reserves register as of the same date. The tax rebate may not be over 50 percent of the tax paid in the respective taxable period.
In addition, the package of laws provides for the possibility of organizing a free customs zone in separate sections of seaports, airports, and on certain land property of resident companies.
A number of measures are also provided for the development and protection of the traditional economic activities of the indigenous peoples living in the Arctic. In particular, a public council will be created to conduct independent monitoring of interaction between residents and indigenous people and to develop measures to protect the environment.
According to the new laws the following 31 territories are added to the Russian Arctic: Kostomuksha city district, Segezha municipal district and Kalevala national district in the Republic of Karelia; Inta and Usinsk city districts and Ust-Tsilemsky municipal district in the Republic of Komi; the villages of Surinda, Tura, Nidym, Uchami, Tutonchany, Yessei, Chirinda, Ekonda, Kislokan, Yukta of the Evenki municipal district in the Krasnoyarsk Territory; and Leshukonsky and Pinezhsky municipal districts in the Arkhangelsk Region. Thus, the Russian Arctic includes four constituent entities of the Russian Federation and 45 municipalities.
Related links:
RF State Duna adopts a package of laws on privileges in the Arctic >>>>
Revised Arctic Development Strategy submitted to RF Government >>>>
Aleksadr Krutikov: Arctic development to continue as planned with inevitable adjustments >>>>
